Does Coke Need A Refill?

By ANDREW MARTIN

Published: May 27, 2007

''A Coke is a Coke and no amount of money can get you a better Coke than the one the bum on the corner is drinking. All the Cokes are the same and all the Cokes are good.'' -- Andy Warhol

WALK through any room of the sparkling New World of Coca-Cola museum here and you get a sense of the unusual purchase Coke has on the American imagination. With a huge, glowing Coke bottle beaming from its roof, this $96 million museum includes a mini-bottling plant, interactive gadgets and a short movie about collectors of Coke memorabilia. Sure enough, a woman wearing a red-and-white Coke pantsuit, with a matching purse, is among the viewers at a recent screening of the film.

Visitors can also create personalized Coke artwork on a computer screen or jot down memories about their first Coke, some of which are posted nearby. One example: ''I remember my first kiss in 1972. I was with Joey Zawadski from Chicago. He was visiting his grandmother who lived in my town. He leaned over to give me a kiss and it tasted like Coke. Joey is gone but I still have my Coke. Betty.''

But while it still maintains its enviable pop-culture status, the Coca-Cola Company no longer wields the kind of business clout it did decades ago, when Coke, as jingle after jingle told us, was the ''real thing'' that graciously taught the world to sing ''in perfect harmony.'' Instead, lashed to a product and a corporate culture that is older than many of its most well-known marketing pitches, Coke has found itself outmaneuvered, at least in the United States, by a host of more creative competitors, like PepsiCo. As those rivals have diversified and taken risks, Coke, the beverage industry's Goliath, has struggled to reinvent itself.

Some, like E. Neville Isdell, Coke's chairman and chief executive, say the company has a good playbook in hand. When he is not talking about ''transformational wellness platforms'' and the ''need state map,'' Mr. Isdell likes to sprinkle the word ''fun'' into his speeches. He refers to his days as a rugby player as ''fun.'' He likes a Coke ad because ''it's absolutely brand-centric and it's fun.'' Working in the soft-drink business is fun, too, he says.

But Mr. Isdell's words aren't entirely convincing: fun has been hard to come by at Coke headquarters here for quite some time.

A towering 63-year-old from Ireland, Mr. Isdell left a comfortable, tropical retirement in Barbados three years ago to return to one of the world's most recognizable companies, but one that was in disarray after years of turnover, misdirection and internal squabbles. In doing so, he became the caretaker of one of the most storied legacies in corporate America, and a business that has set standards for savvy global expansion, lithe, and inventive brand management and marketing panache.

Yet the future of the company that Mr. Isdell took over in 2004 was in jeopardy. Coke's tightly knit and long-serving board selected him after it had unsuccessfully pursued several other big-name chief executives. Meanwhile, PepsiCo, Coke's longtime nemesis, was clobbering it in the United States, helping to cause Coke's stock to lose nearly half of its value from its 1998 high of $88.

Now, nearly three years after Mr. Isdell created a ''Manifesto for Change,'' it remains unclear whether he can reclaim Coke's former glory. He and his team have largely borrowed their turnaround strategy from the heroes of Coke's past: blanket the landscape with Coke signs, push the product in developing markets abroad and spend more money on advertising -- to recapture, as Mr. Isdell puts it, the idea that ''there is a magic around the brand.''

Analysts widely credit Mr. Isdell with improving morale and stabilizing what many considered a dysfunctional company. Coke has a hit in a new product, Coke Zero, and a catchy ad in ''The Coke Side of Life,'' which focuses on its distinctive bottle; the company is also enjoying brisk overseas sales. Its most recent quarterly earnings were its best in years.

To be sure, Coke -- which racked up earnings of about $5 billion on sales of $24 billion last year -- remains a formidable presence, in the United States and overseas. The company's own number-crunchers are fond of saying that a Coca-Cola beverage of some sort is swallowed 1.4 billion times a day in various spots on the planet. (That translates to 58,333,333 servings an hour; or 972,222 a minute; or 16,204 a second.) But Coke is at a crossroads, and it has been slow to make its mark in the booming American market for energy drinks, bottled water and other noncarbonated drinks. Mr. Isdell took a step toward addressing that problem on Friday when Coke announced a $4.1 billion takeover of Glac?, a producer of vitamin-enhanced water.

The Glac? deal is a milestone for a company that has never pulled off a takeover of this magnitude before. Even so, some analysts still wonder whether Mr. Isdell and his board remain too conservative to break from traditions that once served them well but may no longer be suited to a world in which consumer tastes are rapidly -- sometimes constantly -- shifting.